Ottawa to cut health funding by $36B over 10 years

Quebec Premier Jean Charest, left, and Nova Scotia Premier Darrell Dexter, right, share a laugh at the start of the morning session at the annual Council of the Federation meeting in Halifax on Thursday, July 26, 2012. (The Canadian Press/Andrew Vaughan)

The Canadian Press
Published Friday, July 27, 2012 10:08AM EDT

HALIFAX -- Canada's premiers and territorial leaders say they stand to lose almost $36 billion in health transfers over a 10-year period if Ottawa proceeds with its disputed plan to alter how it calculates the payments to the provinces and territories.

Manitoba Premier Greg Selinger released the figures Friday on the final day of the Council of the Federation meeting in Halifax, saying the federal formula will cut billions out of equalization and health funding.

He took a fresh swipe at Ottawa for imposing the controversial funding scheme without consulting the provincial leaders, who have long complained that the federal government is taking a unilateral approach to policy development.

"There is a very significant impact," Selinger said. "We remain very committed to the notion of co-operative federalism where there ought to be discussions about these matters before the decisions are taken because it does have a big impact on Canadians. Those resources will mean less money available for nurses and doctors and health care."

The report assesses the impact of Finance Minister Jim Flaherty's plan to change the calculation for how much money provinces receive in health transfers, which would take effect in 2014.

It estimates that the provinces will receive $36 billion less in federal transfers from 2014 to 2024, compared to the arrangements now in place.

Selinger said the new scheme reduces Ottawa's contribution to the health-care costs of provinces and territories to less than 20 per cent.

The premiers agreed to further discuss the issue at a meeting of provincial finance ministers this fall.

"The next thing we will do is have a further examination and further look at the impacts and the need for a deepened relationship on these issues with the federal government," Nova Scotia Premier Darrell Dexter said.

Selinger said they have to look at options under the federal arrangement that satisfy principles laid out by the premiers in January when they struck the working group that looked at the fiscal impact of the transfers.

"Those principles were that no province should be worse off and that Canadians should have the ability to have a comparable level of service wherever they live in the country," he said.

Flaherty announced last December that health transfer payments would increase at six per cent annually until 2017.

After that, the transfers would be tied to the rate of economic growth and inflation -- currently estimated to be about four per cent -- but the government wouldn't let the amounts fall below three per cent.

The federal government has said the new formula is generous, but Quebec, Ontario, Nova Scotia, Manitoba and Newfoundland and Labrador said Flaherty imposed the deal on them without leaving room for negotiations. Several Eastern provinces with small but increasingly elderly populations have said the scheme will result in punishingly high costs.

P.E.I. Premier Robert Ghiz said his small province would be "destroyed" under the funding formula, adding that "the feds aren't listening to the experts and the experts are the provinces because we are the ones delivering health care in Canada."

Ghiz and Saskatchewan Premier Brad Wall released a report Thursday on health-care innovations with recommendations on how to deliver health care more efficiently. Central to that is a proposal for the provinces to buy bulk generic drugs in a bid to cut soaring health-care costs and to standardize certain clinical practice guidelines.

The premiers also planned to tackle the difficult proposition of coming up with a national energy strategy, but will have to contend with an ongoing dispute between Alberta Premier Alison Redford and her British Columbia counterpart, Christy Clark, over the $5.5-billion Northern Gateway project.

Clark is demanding a greater share of royalties from the project, which would transport bitumen from Alberta to the B.C. coast for shipment to China.